How to Deal With Quarterly Estimated Taxes as a Fitness Business Owner
By Sean Greeley
We believe that financial knowledge and stability are keys to a successful business, and one aspect of being financially sound is properly planning for taxes.
It’s never too early to begin planning for the upcoming year in taxes and our partner, Bookly, can help you each step of the way.
We know how it is when you’re a busy business owner. Sometimes quarterly estimated tax deadlines just sneak up on you. But if you find yourself scrambling to calculate how much you owe each and every time a quarterly estimated tax due date shows up, then we want to help you change that.
If you prepare for QET’s four times per year, you’ll be less stressed and that’s one less hassle to keep you from doing what you really need to be doing – running your small business. Check out these things you can start doing today, right now, so you don’t find yourself jumping through flaming hoops the next time the IRS wants a quarterly payment:
- Keep your books up to date – The IRS wants you to pay a quarter of your tax liability each quarter (hence the name “quarterly” estimated taxes.) That tax liability is your revenue minus expenses plus any tax credits you might receive. If you don’t keep very good track of your income and expenses, how are you to know how much you owe? Use an online service to make sure that you know exactly how much has come in and gone out in your business throughout the year. This will ensure you don’t overpay or underpay Uncle Sam every quarter.
- Use last year’s totals – Another trick when calculating quarterly estimated taxes is to pay at least 90% of what you owed in taxes the prior year. If you do this, the IRS won’t penalize you if you accidentally underpay throughout the year. So, after you’ve filed your income tax returns in April, note how much you ended up owing in taxes. Divide that number by four, and that is the minimum you should pay in taxes in the coming year. Handy!
- Save up – If you have trouble scraping up the funds for a payment every quarter, you’re not alone. Many businesses – like landscaping over the spring thru fall or an eCommerce toy store at Christmas – are highly seasonal. You may find yourself short on cash or even closing your business down during the year. Unfortunately, Uncle Sam still wants his cut.
- Schedule payments – Did you know that you can also schedule your payments to the IRS? It’s true! The Electronic Federal Tax Payment System (EFTPS) allows you to set payments and forget them. Just be sure you’ve set your account up at least two weeks prior to the first date you wish to pay. And, of course, be sure you have enough money in your bank account for the system to deduct! Just like automating your power or cable bill, this allows you to pay your quarterly estimated taxes without worry.